SentinelOne's Q3 Results: AI-Driven Cybersecurity Growth Amid Market Challenges

1 No-Brainer Artificial Intelligence (AI) Stock to Buy With $30 and Hold for the Long Run | The Motley Fool

Cybercrime damages the global economy. Cybersecurity company SentinelOne helps businesses protect themselves. According to a study by McKinsey and Co., if companies were keeping up with the necessary spending needed to fend off the growing threats from hackers and malicious actors, the market for cybersecurity services in the corporate sector would be between $1.5 trillion and $2 trillion per year. As it stands, companies are on track to allocate just $213 billion toward cybersecurity protection in 2024. That suggests there are a lot of companies with inadequate protection. It also suggests a massive opportunity for cybersecurity firms. For those companies with inadequate protection, Cybersecurity Ventures estimates cybercrime will cost the global economy $10.5 trillion in 2025. A lack of cybersecurity could lead to a company paying dearly if it gets struck by a successful attack. More and more companies are paying attention and spending is on the rise. SentinelOne (S -4.30%) is a fast-growing provider of cybersecurity software with artificial intelligence (AI) at its core. It stands to benefit significantly as the spending gap highlighted by McKinsey closes in the coming years. Here's why investors with a spare $30 might want to use it to buy one share of SentinelOne (or perhaps spend a bit more and get multiple shares). Earlier this year, cybersecurity giant Palo Alto Networks (PANW 0.21%) said it had seen a whopping 10-fold increase in the frequency of phishing attacks since 2023. Zscaler has observed a more than doubling in spyware attacks over the last 12 months. Human cybersecurity managers simply can't keep up with the sheer volume of threats, which is why SentinelOne leans heavily on AI. The company's flagship Singularity platform is a holistic solution for protecting cloud networks, employee identities, and endpoints, and it offers a portfolio of unique features powered by AI. Storyline, for example, autonomously tracks security events and generates a timeline for managers, so they can quickly trace incidents back to their sources and take swift action. That can save them countless hours that they would otherwise have to spend manually investigating attacks. In the event of a successful breach, managers can also use Singularity's one-click remediation tool to instantly roll networks back to their previous state, allowing organizations to recover faster. Earlier this year, SentinelOne also launched Purple AI, an AI-powered virtual assistant embedded into the Singularity platform. It can be prompted to hunt for specific threats, dig deeper into security events, and even provide detailed incident summaries. Since it understands natural language, it can aid employees looking to resolve issues who may not be cybersecurity experts. SentinelOne says the average enterprise receives over 1,000 security alerts every day, and Purple AI is designed to help manage that workload. In SentinelOne's fiscal 2025 third-quarter shareholder letter, it said Purple AI had become its fastest-growing product -- and that momentum is likely to continue because new features are still rolling out. SentinelOne generated a record $211 million in revenue during its fiscal third quarter, which ended Oct. 31. That was a 28% increase from the year-ago period, and also above the company's forecast of $209.5 million. That strong result was driven by strong growth in the number of high-spending customers. As of the end of Q3, SentinelOne had 1,310 customers with annual contract values of at least $100,000. That was a year-over-year increase of 250 -- the biggest jump in the company's history. SentinelOne said it also had a record number of customers spending $1 million or more with it annually. The company's solid growth prompted management to increase its revenue guidance for fiscal 2025 by $3 million, to $818 million. SentinelOne could be growing its revenue even more quickly, but it's carefully managing its costs in order to improve its bottom line. That means it's increasing growth-oriented expenses like sales and marketing at a slower pace. Although the company's net loss ticked up slightly (year over year) during Q3, its net loss for the first three quarters of fiscal 2025 came in at $217.6 million, which was an 18% reduction from the same period last year. Plus, on a non-GAAP basis, which strips out one-off and non-cash expenses like stock-based compensation, SentinelOne actually delivered a small profit of $75,000. Simply put, the company's bottom line is trending in the right direction, which will help to create a more sustainable business for the long run. SentinelOne stock currently trades 66% below its all-time high which it set during the tech stock boom of 2021. Back then, its price-to-sales (P/S) ratio was over 100, making it one of the most expensive stocks not only in the cybersecurity industry but also in the entire tech sector. The combination of its falling stock price and strong revenue growth since then has pushed its P/S ratio down to 10.4. That's much cheaper than two of its biggest competitors in the AI cybersecurity space: CrowdStrike (CRWD -1.93%) and Palo Alto Networks: SentinelOne's Q3 revenue growth of 28% was marginally slower than CrowdStrike's revenue growth of 29% during its most recently reported quarter, but much faster than Palo Alto's revenue growth of 14%. Growth rates play a key role in the P/S ratio investors are willing to pay for a stock, so it doesn't make much sense for SentinelOne to be trading at such a steep discount to its peers. With that said, SentinelOne is a much smaller company. It had $770 million in trailing 12-month revenue, compared to $3.7 billion for CrowdStrike, and $8.3 billion for Palo Alto. In other words, it can deliver faster growth more easily because those gains are being measured against a smaller base number. But if the $1.3 trillion to $1.8 trillion cybersecurity spending gap does gradually close in the coming years, there will be plenty of business to go around. That means SentinelOne stock could be a great buy here considering its current valuation, even for investors who already own CrowdStrike and Palo Alto.

SentinelOne Stock Tumbles Despite Increased Guidance. Should Investors Buy the Dip?

Shares of SentinelOne (S 3.58%) tumbled after the company reported its fiscal third-quarter 2025 results, despite the cybersecurity company topping revenue estimates and increasing its guidance. The drop pushed the stock into negative territory for the year. Let's take a closer look at the company's most recent results and the opportunities ahead of it, to see if this is a chance to buy the stock on the dip. Strong revenue growth and increased guidance SentinelOne continued to show strong revenue growth, with sales climbing 28% in its fiscal Q3 to $210.6 million. That came in solidly ahead of its earlier $209.5 million forecast, and ahead of the year-ago mark of $164.2 million. Annual recurring revenue (ARR), which is the annualized value of its customer subscription and consumption-based contracts, climbed by 29% to $859.7 million. It added new net ARR of $54 million in the quarter. Meanwhile, the number of customers with ARR of $100,000 or more grew by 24% to 1,310. SentinelOne again called out its Purple AI solution as being a growth driver, saying it has seen rapid adoption to become one of the fastest-growing solutions in the company's history. It said the attach rate for the solution doubled compared to the second quarter. The company describes Purple AI as the industry's most advanced AI security analyst, and says it can help any analyst conduct complex threat hunts using only natural language queries. Gross margin rose from 73% a year ago to 75%. Adjusted gross margin, which excludes stock-based compensation expenses, edged up to 80% from 79%. The company credits the margin expansion to greater scale, data efficiencies, and increased customer platform adoption. One area that may have disappointed investors was earnings. The company produced a de minimis adjusted profit, or $0.00 per share, which came up just short of the $0.01 analyst consensus. A year ago, the company turned in a loss of $0.03 per share. Operating cash flow came in at negative $7 million, while free cash flow was negative $13 million. However, the company is free cash flow positive on a trailing 12-month basis. It ended the quarter with about $1.1 billion in net cash and short- and long-term investments and no debt. Turning to guidance, the company projected fiscal fourth-quarter revenue of approximately $222 million, which would equate to over 27% growth. It expects adjusted gross margin of 79%. Analysts were expecting fiscal Q4 revenue of $220.6 million. SentinelOne said it is continuing to take advantage of the aftermath of CrowdStrike's IT outage, and that it has a record number of wins versus its closest competitor. It said a Fortune 50 company switched to its platform in the quarter, while a number of federal and local government entities also switched. It added that it saw its most large enterprise displacements ever. Should investors buy the dip? While investors appeared to want more, SentinelOne turned in a strong quarter and offered upbeat guidance that was ahead of analyst estimates. While investor expectations appear to be elevated, the company's valuation is not. The stock continues to trade at a wide discount to peers on a price-to-sale (P/S) basis, despite similar revenue growth to CrowdStrike (29% last quarter) and much higher revenue growth than Palo Alto Networks (14% last quarter). S PS Ratio (Forward 1y) data by YCharts. Meanwhile, SentinelOne's expanded deal with Lenovo, which includes pre-installations and managed security offerings, isn't set to ramp up until the second half of 2025, when the enterprise PC vendor will start shipping PCs with its Singularity Platform preinstalled. Lenovo is the largest enterprise PC vendor in the world, so this is a substantial opportunity. In addition to Lenovo and winning some business from CrowdStrike, SentinelOne is also looking to grow in other areas. It has a deal with Amazon where Amazon Web Services customers can run Purple AI on Amazon Bedrock, the cloud computing company's service for building AI models based on its own and third-party foundational models. SentinelOne is also looking to aggressively expand its presence in the federal government space. Overall, I would take advantage of this dip and be a buyer of the stock, given the opportunities in front of the company and its relatively inexpensive valuation.

Shares down 13% as SentinelOne's loss expands despite revenue beat - SiliconANGLE

Shares down 13% as SentinelOne's loss expands despite revenue beat Shares in SentinelOne Inc. were down around 13% in late trading today after the cybersecurity company reported a widening loss in its most recent quarter and gave a cautious outlook despite reporting beats in other core metrics in its fiscal 2025 third quarter. For the quarter that ended Oct. 31, SentinelOne reported adjusted earnings per share of zero - break even, up from a loss of three cents per share in the same quarter of the previous year, on revenue of $210.6 million, up 28% year-over-year. Both were beats, as analysts had expected an adjusted earnings per share loss of one cent on revenue of $209.7 million. SentinelOne ended the quarter with its annual recurring revenue sitting at $859.7 million, up a healthy 29% year-over-year, with the company seeing customers with annual recurring revenue of $100,000 or more growing 24% to 1,310. On an unadjusted basis, SentinelOne reported a net loss of $78.4 million or 25 cents per share, up from a loss of $70.3 million or 24 cents in the third quarter of fiscal 2024. Analysts had expected a loss of $209.7 million or 20 cents per share. The higher loss was driven by increasing operating expenses, which came in at $246.5 million, up from $201.9 million a year prior. Business highlights in the quarter included an expansion of SentinelOne's artificial intelligence-driven capabilities, including the introduction of Singularity AI SIEM, a cloud-native security information and event management solution designed to provide real-time detection, investigation acceleration and automated responses. The company also announced enhancements to its Purple AI platform, including auto-alert triage and auto-investigations that assist with threat-hunting and investigation processes. Through the quarter, SentinelOne launched AI Security Posture Management, a service that enhances visibility into AI resource deployment and identifies vulnerabilities. Additionally, the company also showcased advancements in hyper-automation through the Singularity Hyperautomation platform, which introduced no-code automation tailored to modern security operations centers. "Enterprises are increasingly selecting Singularity Platform for real-time, autonomous security," Tomer Weingarten, chief executive officer of SentinelOne, said in the company's earnings release. "With our industry-leading innovations and broadening platform capabilities, Singularity is setting the standard for the future of AI-powered cybersecurity." For its fiscal fourth quarter, SentinelOne expects revenue of $222 million and, for the full year, $818 million. Both figures were ahead of an expected $220.6 million and $815.6 million, but given the increasing costs experienced by SentinelOne, the outlook was conservative and may have played a role in investor sentiment in after-hours trading. Chris Boehm, global field chief information security officer of SentinelOne, spoke with theCUBE, SiliconANGLE Media's livestreaming studio, in September, where he discussed behavioral AI and the company's collaboration with Google LLC's Mandiant.

SentinelOne shares fall 13% as loss expands despite revenue beat - SiliconANGLE

SentinelOne shares fall 13% as loss expands despite revenue beat Shares in SentinelOne Inc. were down around 13% in late trading today after the cybersecurity company reported a widening loss in its most recent quarter and gave a cautious outlook despite reporting beats in other core metrics in its fiscal 2025 third quarter. For the quarter that ended Oct. 31, SentinelOne reported it broke even, up from a loss of three cents per share in the same quarter of the previous year, on revenue of $210.6 million, up 28% year-over-year. Both were beats, as analysts had expected an adjusted earnings per share loss of a penny on revenue of $209.7 million. SentinelOne ended the quarter with its annual recurring revenue sitting at $859.7 million, up a healthy 29% year-over-year. The company saw customers with annual recurring revenue of $100,000 or more grow 24%, to 1,310. It reported a net loss of $78.4 million, or 25 cents per share, up from a loss of $70.3 million, or 24 cents, a year ago. Analysts had expected a loss of $209.7 million, or 20 cents. The higher loss was driven by increasing operating expenses, which came in at $246.5 million, up from $201.9 million a year prior. Business highlights in the quarter included an expansion of SentinelOne's artificial intelligence-driven capabilities, including the introduction of Singularity AI SIEM, a cloud-native security information and event management solution designed to provide real-time detection, investigation acceleration and automated responses. The company also announced enhancements to its Purple AI platform, including auto-alert triage and auto-investigations that assist with threat-hunting and investigation processes. In the quarter, SentinelOne launched AI Security Posture Management, a service that enhances visibility into AI resource deployment and identifies vulnerabilities. Additionally, the company also showcased advancements in hyper-automation through the Singularity Hyperautomation platform, which introduced no-code automation tailored to modern security operations centers. "Enterprises are increasingly selecting Singularity Platform for real-time, autonomous security," Chief Executive Tomer Weingarten said in the company's earnings release. "With our industry-leading innovations and broadening platform capabilities, Singularity is setting the standard for the future of AI-powered cybersecurity." For its fiscal fourth quarter, SentinelOne expects revenue of $222 million and, for the full year, $818 million. Both figures were ahead of an expected $220.6 million and $815.6 million, but given the increasing costs experienced by SentinelOne, the outlook was conservative and may have played a role in investor sentiment in after-hours trading. Chris Boehm, global field chief information security officer of SentinelOne, spoke with theCUBE, SiliconANGLE Media's livestreaming studio, in September, when he discussed behavioral AI and the company's collaboration with Google LLC's Mandiant:

SentinelOne down 11% after Q3 profit miss By Investing.com

Investing.com -- SentinelOne Inc (NYSE:S) shares dropped 11% in extended trading after the cybersecurity firm missed Wall Street's profit estimates for the third quarter. For the quarter ended October 31, the company reported a breakeven result, with a GAAP earnings per share of $0.00, falling short of analysts' expectations of $0.10 per share. The Mountain View, California-based company posted a 28% increase in revenue, reaching $210.6 million, slightly above the projected $209.73 million, driven by strong demand. Enterprise clients continue to invest in AI-powered cybersecurity solutions as rising digital scams and high-profile security breaches pose significant risks to business operations and reputation. SentinelOne has introduced innovative products, including the generative AI-powered Purple AI and the Singularity platform, aimed at addressing vulnerabilities associated with businesses' expanding digital presence. The company issued revenue guidance for the fourth quarter, projecting it to be approximately $222 million. "Based on strong execution and business momentum, we're raising our revenue growth outlook to 32% for the fiscal year '25," the company said in a statement.

What's Going On With SentinelOne Stock After Hours? - SentinelOne (NYSE:S)

SentinelOne expects fourth-quarter revenue of $222 million versus estimates of $220.77 million. SentinelOne Inc S reported third-quarter financial results after the market close on Wednesday. Here's a rundown of the report. Q3 Earnings: SentinelOne reported third-quarter revenue of $210.65 million, beating the consensus estimate of $209.72 million, according to Benzinga Pro. Total revenue increased 28% year-over-year. Annualized recurring revenue (ARR) increased 29% to $859.7 million as of Oct. 31. Customers with ARR of $100,000 or more grew 24% to 1,310 in the quarter. The company ended the quarter with $1.1 billion in cash, cash equivalents and investments. Outlook: SentinelOne expects fourth-quarter revenue of $222 million versus estimates of $220.77 million. The company expects full-year 2025 revenue of $818 million versus estimates of $815.92 million. Check This Out: Generative AI Backed Cybersecurity Stocks Cloudflare, Okta Have Near-Term Upside: Analyst "Enterprises are increasingly selecting Singularity Platform for real-time, autonomous security. With our industry-leading innovations and broadening platform capabilities, Singularity is setting the standard for the future of AI-powered cybersecurity," said Tomer Weingarten, CEO of SentinelOne. Management will further discuss the quarter on a call with analysts and investors at 5 p.m. ET. S Price Action: SentinelOne shares were down 10.04% in after-hours, trading at $25.80 at the time of publication Wednesday, according to Benzinga Pro. Photo: Courtesy of SentinelOne. Market News and Data brought to you by Benzinga APIs